Clyde & Co – 2025 Predictions

Clyde & Co’s industry and legal predictions for 2025 address how businesses and jurisdictions will navigate an increasingly fragmented and volatile world. Key areas of focus include what’s in store for energy security and Europe’s march towards energy independence amidst the ongoing Russia-Ukraine conflict, Southeast Asia's legal reforms to attract global manufacturers, and transformative regulations such as the EU's Digital Operational Resilience Act (DORA) and the UK’s Future Homes Standard.

Prediction 1: Impact of upcoming regulation including the Future Homes Standard on the UK residential property market

Future Homes Standard to drive UK's green property investments in 2025

“The Future Homes Standard, expected to come into effect by 2025, sets ambitious performance targets for new homes to significantly reduce carbon emissions.

From a market perspective, this will likely raise the bar for developers and attract investment in technologies and materials that align with these standards. The rigour of new regulations will challenge the industry while also opening the door to innovation. Homeowners may find increased long-term value in homes that promise sustainability and energy savings, reshaping demand patterns in the residential property sector. Time will tell whether mortgage companies, banks and insurers need to offer preferential terms for these more efficient homes so as to meet their own sustainability and climate change targets.

Contractors and housebuilders must consider whether their supply chains need adapting or updating so they can meet the Future Homes Standard, including in relation to heat pump technology. The Future Homes Standard is intended to reduce carbon emissions from compliant homes by 31% from those produced by current standards and so will have a marked impact on how housing projects are delivered in practice. Contractors and housebuilders will need to be ready to properly price the work needed to meet the new requirements.

For investors and developers, adapting to the Future Homes Standard will be critical. Legal advice across the industry will increasingly revolve around compliance and best practices in sustainable development. The alignment of the government’s investment initiatives with the Future Homes Standard means that the residential property market is likely to be moving towards a future that balances economic growth with environmental stewardship. This reflects the UK's commitment to a greener economy and offers fertile ground for investments that echo this shift.”

Partner: Chris Leadbetter

Prediction 2: Outlook for European energy security (renewables production) as we enter the third year of the Russia-Ukraine war

EU to accelerate renewable shift for energy autonomy in 2025

“As the shadows cast by the Russia-Ukraine war stretch into a third year, Europe's energy security landscape will continue to be reshaped with the EU continuing to pivot toward renewable energy production. In 2023 alone, 56 GW of capacity in photovoltaic installations and 17 GW in wind farms were commissioned across the Union.

This is driven by a strategic imperative as much as an environmental one, with the EU setting ambitious targets to reduce dependency on imported fuels. Member states are rallying behind renewable power, marking a concerted effort to strengthen the continent's energy security while meeting ambitious climate goals. According to data from the European Commission’s Impact Assessment Report, increased renewable energy production enabled a reduction in gas consumption by 15% and coal consumption by 26% in 2023. 
Legal and regulatory considerations involve the refinement of electricity market designs to accommodate greater renewable energy capacity, ensuring a stable, reliable, and efficient electricity system. The expansion of renewable and carbon-free energy sources is also expected to help relieve upward pressure on energy prices.

Moreover, Europe has recently recognized the potential of developing distributed energy through local balancing areas. For instance, renewable energy installations combined with energy storage systems can balance energy production by ensuring power supply to a given area at specific times. Such projects are expected to become increasingly common."

Partner: Agnieszka Kulińska

Prediction 3: Emerging manufacturing hubs in SE Asia and global supply chain links

Southeast Asia's legal reforms to further entice global manufacturing in 2025

“Southeast Asia's emergence as a pivotal manufacturing region is as much about savvy legal and regulatory evolution as it is about economic strategy. Nations are enacting forward-thinking reforms to draw in global manufacturers looking for stability within the upheavals of international trade and intensifying geopolitical tensions.

Vietnam, Indonesia, the Philippines, Thailand and other ASEAN countries are developing legal landscapes that promise clarity, ease of doing business and investment protection. Regulatory developments include streamlining business registration processes, strengthening protections for intellectual property, developing tax incentives for industries, employment law reforms and the easing of foreign ownership restrictions.

The harmonisation of regulations within ASEAN is transforming the region into an ever closer market, reducing barriers to cross-border trade and investment. This is bolstering the appeal of the region as companies recalibrate their supply chains in search of jurisdictions with fewer hurdles and, ultimately, less exposed to geopolitical volatility.

Intellectual property rights are receiving particular attention, with individual countries ramping up their legal protections to reassure foreign investors and align with international standards.”

Partner: Ton van den Bosch

Prediction 4: Will DORA be a new dawn for cybersecurity resilience in the EU

DORA to revolutionise EU insurers' cyber resilience in 2025

“With the EU’s Digital Operational Resilience Act (DORA) set to become applicable in early January 2025, cybersecurity and digital robustness will have an even more prominent role on the market’s financial stability than it did before. Insurers and other stakeholders in the insurance sector will be mandated to implement comprehensive measures to increase their digital operational resilience and therefore mitigate cyber threats and manage IT third-party risks. This is no small feat in an industry that thrives on the management of risk and the safeguarding of assets.

DORA places a clear emphasis on proactive defence. It will catalyse a shift towards greater transparency and accountability, as insurers will be expected to report major IT-related incidents with a level of detail previously unseen. This transparency is not just for the regulators' benefit; it will enhance consumer trust in an industry where confidence is the currency.

While regulatory interventions are often met with scepticism and resistance, this Act will ultimately raise resilience in the insurance industry, drive cyber innovation and, in turn, improve competition by harmonising the existing, disjointed frameworks across the region.”

Partner: Jan Spittka

Prediction 5: UK real estate and construction industry positioning for growth and investment

Legal, regulatory and investment developments loom on the horizon for UK real estate and construction

“As the government pushes forward with its ambitious legislative agenda, eyebrows have raised in response to the absence of real estate in the eight growth sectors identified in the Industrial Strategy. Nevertheless, there are many in the industry who would argue that the real estate sector underpins most, if not all of those growth sectors, and opportunities are clearly arising as a result.

Legal and regulatory developments loom on the horizon, especially for the residential property sector, with more streamlined planning processes and the barriers that have long held back development projects lifted. This includes the proposed reforms to the National Planning Policy Framework which are set to also incorporate sustainability, economic growth, community well-being, and environmental protection into local authority guidelines.

We can expect a hybrid model of investment for the wider sector, with the return of public-private partnerships. The Chancellor’s Autumn Budget, which laid out its plans to introduce a new tax transparent investment vehicle known as the Reserved Investor Fund, will be particularly attractive for institutional investment in UK commercial real estate as it is intended to compete with some offshore vehicles.

We can expect an uptick in activity across the UK’s infrastructure landscape. A commitment to modernising and expanding transportation networks carries opportunities for forward-thinking investors, especially those who want to capitalise on the UK’s net zero transition.”

Partner: Annabelle Redman